Feds give state a break on insurance rule

The federal government has given Georgia health insurers a break on meeting new restrictions on how they spend premium dollars under health care reform.

Under the 2010 health reform law, insurers in a state are required to spend at least 80 percent of those dollars on medical care costs under policies bought by individuals.

But a decision by the U.S. Department of Health and Human Services, announced Tuesday, would allow Georgia health insurers to meet that level gradually, with a 70 percent mark in 2011, 75 percent in 2012 and 80 percent in 2013.

State Insurance Commissioner Ralph Hudgens and an insurance industry leader applauded the federal agency’s decision to grant Georgia a waiver from the rule.

Hudgens did not get everything he requested. He had asked that HHS phase in the 80 percent requirement at a 65 percent mark in 2011, 70 percent in 2012 and 75 percent in 2013.

Georgia joins a handful of states that have been granted a waiver from the 80 percent ”medical loss ratio’’ requirement. A state can get an adjustment if it shows the requirement would disrupt the market for policies sold to individuals.
Meeting the 80 percent rule now “would destabilize the individual market in Georgia, and consequently many Georgians would be harmed in the process,’’ Hudgens said in a statement about the decision. “I am pleased that HHS agrees with my concern.’’

Hudgens also reiterated his belief that the health reform law, known more formally as the Affordable Care Act, is unconstitutional.

(Separately, a split panel of U.S. appellate judges in Washington, D.C., on Tuesday upheld the health care law as constitutional, helping set up a Supreme Court fight.)

HHS concluded in its decision that the 80 percent rule, if  imposed immediately, could lead to three insurers leaving the Georgia market.

Graham Thompson, executive director of the Georgia Association of Health Plans, said Tuesday that the Georgia market for individual insurance policies ‘’is extremely fragile.’’

Implementing the full 80 percent level now “would have been a real shock to the system,’’ said Thompson, who had supported Hudgens’ request for a phased-in approach.

“A measured approach is the right approach,’’ Thompson said. “Now insurers know the rules.’’

An estimated 350,000 Georgians have individual health policies, with Blue Cross and Blue Shield of Georgia having the biggest market share.

The health reform law requires insurers that miss the 80 percent mark would have to pay rebates to individual policyholders, beginning in January.

A coalition of consumer groups opposing Georgia’s waiver request had calculated that the state’s bid for a break would cost insurance policyholders about $34 million in rebates.

One of those groups, Georgians for a Healthy Future, nevertheless said Tuesday’s medical loss decision ‘’is a step in a better direction for consumers.’’

Cindy Zeldin, executive director of the group, noted that the percentages the feds agreed on were stricter on the state than those sought by Hudgens.

The HHS decision, she said, “is a reasonable compromise that weighed the concerns of the insurance industry against the value that this rule would provide consumers.’’

Zeldin did not have a calculation immediately available on how much the new percentages would cost consumers in rebates.

But she said the existence of a rule on premium spending would inject more transparency into consumers’ insurance-buying process.

“Insurance companies in Georgia have never had to report how they spend their premium dollars,’’ she said. “It really does push insurance companies to operate more efficiently.’’